Global tin: Low liquidity stalls Europe premium

Global premiums held over the week ended on May 14, while tin prices on the London Metal Exchange have been erratic and frequently at odds with record-low global stocks.

Thin spot trade in the United States provides no basis for change but some offers trend down.

Price volatility inhibits European trade.

Chinese premiums extend lengthy flat-line trend.

Premiums hold, but US buyers emboldenedThe US premium for tin ingot was steady for the first time in three weeks but with signs of buyers gaining the upper hand amid notably little US spot buying in a market that both sellers and buyers agreed was oversupplied.

Only big buyers could command the new lower premiums below $500 per tonne, sources told Fastmarkets last week.

This week, one smaller buyer - who is used to paying around $600 per tonne for a truckload or less - was offered the same grade-A quality tin at $475 per tonne, yet bought none because he is well stocked, end demand is mediocre and he has scrap alternatives, he said.

“I can’t remember how long it is since I was offered tin so low but it has been at least a year,” he said. “I told them, ‘Make me an offer that I cannot refuse.’”

This demonstrates the sluggish state of a US domestic tin market with surplus supply, notwithstanding official global tin stocks being extremely low.

Tin stocks on the London Metal Exchange surpassed the 1,000-tonne level on Wednesday for the first time since late March, moving to 1,095 tonnes from 890 tonnes a day earlier. But stock levels for May were averaging less than 867 tonnes as of May 14, down by nearly 64% from the more than 2,393 tonnes held in LME warehouses in May 2018.

Tin landed in LME warehouses in the US this spring, a rare occurrence. Tin is also being held outside of the LME network that is not recorded in the exchange's stocks.

Tin reportedly changed hands at a premium of just $410 per tonne after arriving at an LME warehouse in Baltimore in March, where most of it has remained.

European premiums unchanged amid low liquidityIn Europe, Fastmarkets assessed the premium for 99.9% standard-grade tin ingot, with 300ppm lead content on an in-warehouse Rotterdam basis, at $410-450 per tonne on May 14, maintaining a range held since April 2.

Physical tin market participants continue to report a subdued buying appetite for 99.9% tin ingots this week amid ongoing uncertainty over the full resumption of Indonesian exports, with volatility in tin forward spreads along with LME prices further quieting the European market.

Indonesian state-owned producer PT Timah continues to dominate exports from the region - the world’s second-largest tin producer - with participants reporting that the producer is offering material at around $440 per tonne, Fastmarkets heard.

“PT Timah dropped their premiums about a month ago to sub-$400-per-tonne levels to shift volume and have now raised them by $30-50 per tonne, which might not be attractive in the current market,” a Europe-based tin trader told Fastmarkets.

Meanwhile, downstream by-product tin sectors such as brass, bronzing and tinplate are reportedly struggling this year, a second Europe-based tin trader said.

“I spoke to a large tinplate producer and their business is down by 40-45% compared with 2018,” the trader added. “They have to rely on the domestic [European] market because they can’t export to the US due to the 25% import duties.”

A third trader confirmed that the current market is limiting long-term business, with merchants and producers traditionally offering metal forward amid volatile backwardations and prices.

Tin’s cash/three-month spread was recently in a backwardation of $210 per tonne, widening from $105 per tonne last week.

“The spreads are so unknown, you don’t know where you’ll be pricing with this backwardation. Wider backwardations add more cost and with a volatile three-month outright [price], price-fixing has become harder,” the trader source said.

The LME futures tin price has broadly been trending lower despite deliverable LME stocks remaining at their lowest level since 1989, with just 555 tonnes on-warrant.

Asian premiums unchanged with import window closedIn China, Fastmarkets assessed the premium for 99.9% tin ingot cif Shanghai at $230-250 per tonne on May 14, unchanged from the previous week, largely because the import window was closed.

“There’s no chance to do imports or exports currently and in domestic China, business is as quiet as usual,” a Shanghai-based trader said on May 14.

Tin stocks on the Shanghai Futures Exchange rose by 1,181 tonnes week on week at 8,477 tonnes on May 10, with weak domestic demand cited as the main reason for the increase.

Elsewhere, Fastmarkets’ assessment of the 99.9% tin ingot premium cif Taiwan was at $200-220 per tonne on Tuesday, unchanged since December 4.

Click on the image above to view the table in full size.

Hassan Butt in London and Violet Li in Shanghai contributed to this report.